Interest Rates - can someone explain why...

[robbie274]

Good point.
I hadn't noticed that the min payment %age had dropped until you mentioned it and I checked the statement that arrived this morning. Admittedly I haven't had a C Card balance for quite a while, but I can see how it would help to perpetuate the debt spiral in many cases.

blimey 2%, so if the credit 'boom' continued then what would of it got down to? Would it be a case of borrow it and pay it back when you can.

[TykeMerc]

A much more sensible option is to raise the minimum payment, it used to be 5% which was too low IMO, in recent years they've been getting away with 2% which is debt trap if ever I saw one.

Good point.
I hadn't noticed that the min payment %age had dropped until you mentioned it and I checked the statement that arrived this morning. Admittedly I haven't had a C Card balance for quite a while, but I can see how it would help to perpetuate the debt spiral in many cases.

[gingerjedi]

I am for high interest rates because it should deter using CCs for long-term borrowing, and thus building up unaffordable debt.

A much more sensible option is to raise the minimum payment, it used to be 5% which was too low IMO, in recent years they've been getting away with 2% which is debt trap if ever I saw one.

[TykeMerc]

So basically the entire credit card industry is toxic?

It's always had a toxic element yes since they take quite high risk and price accordingly.

They also insure purchases which is additional risk and therefore cost.

[Cyberman]

If you pay for something over 100 pounds on a credit card and you are defrauded or the goods dodgy, you can claim back the amount paid under the 1974 Credit Card Act, so as a previous poster stated it covers insurance.

Some credit cards also give you an element of automatic travel insurance.

I am for high interest rates because it should deter using CCs for long-term borrowing, and thus building up unaffordable debt.

[expat]

Most of the rate on Credit Cards goes do indemnifying the CC company against bad debt.

(when the rate is 12% the breakdown is something like 2% to borrow the money to lend out, 2% profit, and 8% for bad debt ).

So basically the entire credit card industry is toxic?

[Archangel]

Most of the rate on Credit Cards goes do indemnifying the CC company against bad debt.

(when the rate is 12% the breakdown is something like 2% to borrow the money to lend out, 2% profit, and 8% for bad debt )

bad debt is rising.

[gingerjedi]

Credit card rates have gone up for new customers, personal bank loan rates are twice what they were.

They aren't making money from mortgages so they have to make money elsewhere, how else would they pay the obligatory bonus?

[BrilloPad]

Its a cartel.

Only way out is to pay off everything you owe.

[Bluebird]

When the BoE reduce IR, the banks & BS will "normally" reduce rates on mortgages etc, but Credit Card interest rates remain the same?